Irish Residential Properties REIT (Ires REIT) has acquired 146 units at the Phoenix Park Racecourse development for €60 mln (€62.7 mln including costs).
The acquisition will be funded using existing company resources (including, for example, proceeds from the €48 mln disposal of non-core units last month) and current debt facilities. The transaction is expected to complete in January 2021.
The development is in the west Dublin suburb of Castleknock. The Phoenix Park Racecourse units are mostly existing stock (120 units) built in the last market cycle, between 2002-2007 and have been rented on the open market since completion.
The units include a mix of apartments, duplex units, penthouses, and houses. The scheme was built by well-known developers Flynn & Flaherty Construction. One new block was built this year (26 units) and is mostly let, with several units currently advertised to rent.
Based on current annualised passing rents on the 137 residential units and the lease up of the remaining 9 residential units, Ires expects the asset to generate an initial gross yield of 5.3%.
Based on current market rent levels, property analyst Goodbody suggests Ires have agreed to acquire the entire development for an approximate net initial yield of around 4.05%. This represents relatively keen pricing for older stock, while newer schemes in Dublin, both in the suburbs and city, has consistently tracked below 4.0%. Prime market initial yields are now at 3.75% according to most valuers.
The deal continues a busy year for Ires. Ongoing developments include Bakers Yard (Dublin 1). Ires currently owns 3,689 residential units, with 66 under construction and 543 units in the longer-term development pipeline.
